X-Files: Macroeconomic Policy & the Optimal Destruction of Vampires

“Although human beings have endured the recurring ravages of vampires for centuries, scarcely any attempts have been made to analyze the macroeconomic implications of this problem and to devise socially optimal policy responses. Despite the increasing incidence of vampire epidemics in recent years (in Transylvania, Hollywood, and elsewhere), vampirism remains a thoroughly neglected topic in the theory of macroeconomic policy.”

That is the opening paragraph of Snower’s (1982, p.647) article titled “Macroeconomic Policy and the Optimal Destruction of Vampires”. We kid you not.

Snower (1982, p.647) goes on to assert that “the blood-sucking ghosts […] have periodically provided grave threats to human populations; their most conspicuous macroeconomic impact arises from their detrimental effect on the labor force.”

Don’t get confused with the paper’s title though, Snower doesn’t want us to turn all Van Helsing on vampires and ram stakes through their hearts. No. He wants to find out how many vampires we need to kill in order to reach an optimal point, to balance the human-vampire relationship.

To discover the optimal destruction of vampires, Snower (1982, p.648) builds a model of human vampire dynamics where he assumes a representative vampire, which requires an exogenously given amount of blood per unit of time, where this blood must be extracted from a human being’s neck and it is possibly to kill this vampire by exposing it to direct sunlight or by driving a stake through its heart. It is also assumed in this model that each human provides labor services, and these services are devoted either to the production of widgets (which contribute to human well-being) or stakes (which are used to kill vampires).

After analysing his model, Snower (1982, pp.649-650) comes to the following conclusions:

The model supports the well-documented empirical observation that a decrease in the production of stakes, over a prolonged period of time, results in a vampire epidemic and a reduction in the labour force.

Any stabilization policy is unable to induce a dynamically stable stationary state compatible with the survival of human beings.

And, despite many prominent investigators of vampirism suggesting that all vampires should be destroyed, this research shows that such a policy would not be socially optimal. It is socially undesirable to drive the vampire species to extinction.

In terms of future research in this field, Snower (1982, p.655) suggests we focus our studies on models in which vampires have rational expectations. We implore economists the world over to engage in this research immediately because, after all, there is a lot at stake!!

Bibliography

Snower, D., (1982), Macroeconomic Policy and the Optimal Destruction of Vampires, Journal of Political Economy, 90(3).